The strong Rand, the Chinese, the cost of logistics, local inefficiencies, the oil price, crime, the list goes on. Both perceived and real, all of these factors impact negatively on the ability of South African companies to compete here and internationally against foreign competition.

Large blue chip companies with their geographical spread, business diversity and deep investment pockets can weather the peaks and troughs of a changing world but what of the Small and Medium Size Enterprises (SMEs) and the challenges to their sustainability and growth?

Peter Hurst - Managing Director of Added-Asset & Associates , now based in Cape Town, has been immersed in bringing international success to UK SMEs for the past years working with and then managing the London International Trade Team for UK Trade & Investment (UKTI).  (UKTI is the UK Government organisation that supports British companies engaged in international trade).   This large team of International Trade Advisors worked with over 500 London SMEs a year on intensive support programmes spanning many months enabling them to become new exporters, compete in new international markets and take on imported competition using their now enhanced skills.

With Peter's London and USA experience and intimate knowledge of South Africa, having held senior marketing positions here and championing the UK/South Africa partnership initiative in the London team, he can empathise with South African companies challenged by the dynamics of constant global change.

SMEs, by the very nature of their entrepreneurial beginnings, are often their own worst enemies when it comes to liberating the company to perform to new heights. The owner/manager is often unsighted to the symptoms that lead to stagnation or ultimate failure.  Sadly, many have the attitude that ‘because it's their train-set' they wont let anyone else play unless it's by their rules.  Subordinates are not empowered to tell them that there might be a better or different way of doing things.

Many of the companies that asked for help in London were either too late and looking for a ‘miracle' or paid lip-service to the experienced advisor - nodding sagely and then continuing to muddle on as before.  What do you say to someone who's not listening?  Nothing because they are not listening, says Peter.

Good examples of this learning came from Peter's London experience. If you recognise these traits as ‘the boss' or if you as an employee see the company this way then you might want to consider your long-term position or personal growth:

SMEs ‘In Trouble'

1. They continue to develop ‘Version 3 and 4' when they haven't actually sold / made a profit on versions 1 and 2.  This is the owner/manager ‘in love with technology' and product/service development and always short-changing the marketing and sales activity preferring to put any money into ‘backroom boys' protected from the front-line/bottom-line reality.
2. They are very busy installing/updating our IT, implementing another quality system, conducting studies into reducing the cost of stationery and don't have time to concentrate on new business. Instead of the owner/manager managing the process, the process is managing the company.  Again the marketing and sales discipline is usually the poor relative and ‘order taking' not ‘order making' by the under-valued Sales Department is typical.
3. You'll have to wait until the boss gets back. The owner/manager makes all the decisions (even the colour of the loo rolls).  This is the boss that can't delegate and the company will never grow until he changes or is changed!
4. Then there is the company that is run for the sake of the owner/s only.  These are the ‘life-style businesses' that exist only to benefit the shareholder/s - never mind the advancement of employees and all the other stakeholders and partners that it needs to include to grow effectively.

Diagnosing the Problems / Revealing the Opportunity
Before embarking on an aggressive export plan or taking on local competition, (to win back or increase market share), it is imperative that the owner/manager accepts that change is critical and this can only be understood if there is a climate of openness and a meeting of the minds with the business advisor/mentor in a trusting relationship.  This is one reason why the London International Trade Team remains a winning UK region in developing successful SMEs.  Added-Asset's approach takes the form of an in-depth ‘Health Check' Programme to fully understand the current position of the company, reach consensus in feedback sessions with the owner/manager on the present status, produce the ‘gap analysis' to establish development needs and growth goals (gain buy-in at each stage) and then construct the action plan, involving all in the company and thereafter mentor the change process often becoming a virtual member of the management team.

A highly successful and more intensive intervention takes the change programme to deliver even greater strategic outputs. Added-Asset's ‘Reveal All' Programme which establishes the internal perspective on company performance in all disciplines within the organisation (and at all levels) and then using the same question-sets establishes the view from the market (customers, suppliers, competition).  The revelations are often shocking in terms of how the company perceives its performance and to those who see the company externally and how it actually performs for them.  This programme has been conducted in both a local situation where a company wants to compete better in the domestic market or where a company wants to trade or is trading internationally.  The needs assessment this generates is complimented by Added-Asset's training programmes which include, Motivational Training, Management Development, Developing an Export Plan / Sales and Marketing Training, Culture & Language Sensitivity Training, Business Etiquette Training.  These training modules are delivered by professionals both from the UK and South Africa.

Selecting the Export Market
Once the company accepts the challenge to ‘raise its game', market selection (Market Matching) becomes an important next stage.  There is a natural tendency to look at the markets where the barriers to entry such as culture and language are perceived less of a concern, the UK and the USA for example.  In the case of the UK it is one of the oldest trading nations in the world and as such is extremely ‘street-wise' when it comes to offers from abroad. Manufacturing has moved to high-value products as low-tech manufactured goods have long been replaced by imports, London is a predominantly a services market although it is still the fashion design capital of the world (surprisingly not Paris or Milan) and the UK capital's ‘rag-trade' days are long gone.  Creative Industries, including film making thrive in London and with over 25% of London's 330,000 SMEs being form ethnic minority backgrounds, many of these export and import exotic food products and ingredients and other traditional products. Biotechnology and ICT are well represented too and many of the key sectors match the Western Cape's important sectors which offer great opportunities for trade, joint ventures and acquisitions.  But beware, the UK is quick to change suppliers, is very price sensitive and does not suffer fools.  One major criticism from the London SMEs wanting to engage with South African businesses is that SA companies are poor at communicating and that there is an apparent lack of urgency compared to others courting trade.

One of the most important aspects of the UK, and London in particular, is that it is the natural springboard to the rest of Europe and the Scandinavian countries.  Of note is that the Scandinavians are extremely friendly in talking business with the UK, most speak English and by default a very welcoming to South African businesses who wish to export to these small but rich nations.

By contrast the USA is massively complex in size, culture, specifications, legislation (and litigation) and logistics and many of the London SMEs quickly reconsidered their American aspirations tackling the US by State, region or not at all once they were made aware of the cost of doing business and the resources required (skills, time, money, management).

Markets such as Japan and Germany are challenging to enter but once the exporter has delivered on service, quality, price and management commitment then they are usually ‘life partners' and more importantly - pay on time! But, a company needs to be prepared in terms of cultural sensitivity, a long-term strategy, and, as with all export development the investment - patience and flexibility.

In concluding, Peter says that a combination of hands-on professional advice and training from people who have actually ‘done the job and got the tee shirt' is critical for any business embarking on an export drive or wanting to improve in the local market and gain share where the challenge may now come from imports or local competitors with international exposure.  ‘You can't learn this stuff from books.  Know before you go and use all of the information agencies available, Government and non-Government to provide you with at least a ‘dipstick' view of the market'.  Added-Asset offers its clients bespoke market information as part of its support programme which will give an overview of who are the competitors, what are the import barriers, the compatibility of the product or service to the local market requirements etc.  Successful exporters will agree that the line between local sales and export sales eventually merges and the customers in other countries become part of an integrated client management system and approach to conducting business better - to world standards.